European leaders are being shaken out of their complacency. With news that coronavirus infections have been identified in every EU country, the economic outlook is worsening as fast as the disease is spreading. The Bank of England’s emergency stimulus on Wednesday, as well as actions taken by EU governments, put the onus on the European Central Bank to do its part.

Radical policies are being rolled out across the EU. Quarantine measures now apply to the whole of Italy. Spain, which has seen the sharpest acceleration of infections in recent days, has closed one chamber of its parliament and banned direct flights from Italy. Austria is imposing border controls.

These disruptions, along with the effect on confidence from the intensifying siege mentality, are rapidly causing economic damage. The eurozone economy was already suffering a slowdown. This motivated the ECB’s easing package in September last year, which helped arrest if not reverse the industrial recession. But any stabilisation has now been undermined by the Covid-19 crisis. Some observers suggest that the eurozone could see its sharpest economic contraction since the global financial crisis.